• Patrick Chung

Q&A with Xfund’s Patrick Chung and Brandon Farwell – Part I

At Xfund, Patrick Chung and Brandon Farwell work with leading research universities to back brilliant entrepreneurs who think laterally across disciplines.

Patrick and Brandon’s history goes back more than 15 years. Here, they share more about how they met and why their partnership works.

How did you two meet?

Brandon: I’m a West Coaster from Menlo Park, born in the heart of Silicon Valley at Stanford Hospital. I went to undergrad at Stanford, class of 2008. I met Patrick when I was a freshman at Stanford while helping to run BASES, a student-run entrepreneurship club on campus. Patrick was at NEA and became a phenomenal mentor-advisor and sponsor of BASES.

I was working on a company at the time with a few friends—we were building software to help high school students assess and predict their candidacy for undergrad admissions. Back in high school, applying to colleges was extremely stressful. There was this giant mythical black box of how college admissions officers made their decisions of who got in and who didn’t. So we built a data science solution to help high school seniors narrow down and understand the likelihood of their acceptance and ultimately matriculation into universities. Many students don’t have access to college counseling, and we wanted to provide a data-driven, turnkey solution for high schoolers to alleviate the stress of college applications. Patrick was a great help and advisor throughout that entrepreneurial foray.

I worked for about a year and half in one of the venture capital and private equity groups of Credit Suisse, called Strategic Partners, which is now part of Blackstone. I joined DFJ in early 2010 and worked for them for about four years, and was hired by a terrific guy and investor named Josh Stein, a close friend of Patrick’s as well, who now runs the firm under the rebranded name Threshold Ventures. I got to work on investments in companies up and down the enterprise software stack—companies like Twilio (NYSE: TWLO), Box (NYSE: BOX), Yammer (acq., MSFT for $1.2b), InsightSquared, etc.; mostly a focus on enterprise B2B SaaS, in addition to some deeper tech frontier themes. I got to be exposed to companies like SpaceX and Planet, a microsatellite company, and Tesla, which is now public. I also did a quick stint in corporate development and sales operations at Box, enabling me to see from the inside how a rapidly scaling enterprise SaaS company functioned.

I got my MBA at Harvard, and while there, I collaborated a lot with Patrick and Xfund, given that Xfund was cofounded with the institution and had a big presence on campus. It was a lot of deal flow sharing, attending events, and working with Patrick.

After I got my MBA, I was considering going back to DFJ or a large, established, institutional venture firm. Instead, I joined a small, brand new fund called RV and invested with them for about two and a half years. Mike, the founder and sole general partner, was a friend and colleague in undergrad and business school, and he hired me to help build the portfolio. I invested just shy of $50m in about 100-120 seed stage companies with an early stage mandate, writing checks of $100k to $1m. Many of the people we invested in were our friends and colleagues from undergrad and business school, who had companies that we believed in and that had unique value propositions. We were very fortunate to be early backers in a handful that have done incredibly well—for example, Patreon, Robinhood, Gusto, Andela, Boom Supersonic, Nearpod, Vicarious Surgical, Customer.io, and Chubbies. I departed to work with Patrick at Xfund in early 2017.

Brandon, what made you want to join Xfund?

Brandon: I think having a structurally unique and differentiated value proposition as a venture fund is a must-have in today’s highly competitive venture world.

We joke about this, but Xfund was born with a silver spoon in its mouth. It was cofounded by an institution that has printed some of the most iconic venture-backed startup successes in the world: Microsoft, Facebook, Zappos, and Bloomberg, to name a few. Being cofounded by an institution like that and two other established, well-capitalized venture firms is just an extremely privileged position from Day 1—period. It’s hard to compete with that, in terms of having a structurally advantaged position initially, with respect to deal flow and building a brand entrepreneurs want to work with.

You take a slug of equity from Xfund and you’re automatically placed in an incredible network of universities, of which Harvard is at the forefront, plus the networks and folks of NEA and Accel Partners. It’s a pretty impressive proposition.

I’ve also always been attracted to the fact that we’re a universities-based and universities-focused fund, but we’re open to all founders, regardless of university affiliation. We don’t just back Harvard grads; Harvard grads in our portfolio represent less than 40% of what we do. The other 60% is spread across a handful of other target schools where we’ve built relationships at the faculty, student, and institution level—my alma mater, Stanford; UC Berkeley; MIT; and Penn. We’ve also done work internationally at the University of Toronto and University of Waterloo and in the UK with Cambridge and Oxford. But for us to continue to be successful with our strategy, we’re not exclusively backing students from those institutions. We find great founders, no matter where they are, and enable the institutions in our network to help them succeed.

For example, we help our founders recruit out of Harvard and other universities and get access to resources, datasets, and academics. The universities do two things for us—they don’t just allow us to meet founders, but also to help our founders achieve amazing things. It’s a win-win for the university and the founding team.

By working closing within these university networks, we get to meet budding founders early in their entrepreneurial journeys. In some of our most successful investments, Xfund has played a critical role in helping tip these founders into pursuing their ventures full time post-school, as opposed to pursuing a more default career path like finance or consulting. Knowing that Xfund has enabled founders—many of whom encounter societal, family, and financial pressures to pursue a more default career—to pursue the career they are meant to is beyond rewarding for me.

The third thing that attracted me is that Patrick is a consummate professional. He knows the business extremely well, has a phenomenal track record, and is well-respected, thoughtful, and just a good person to work with. In this business, the intellectual property and assets of any venture firm is the compilation of its people—we’re not building SKUs; we’re not making Beanie Babies. We’re investing in companies and supporting founders. Our IP is our people. So obviously that is important.

What makes you a good team?

Patrick: In my experience, it’s really rare in venture to have two people with such a long shared history. Usually people have only been working together for two or three years. Brandon and I have literally known each other for 16 years. We first met because we struck one of the first partnerships between a venture capital firm, NEA, where I worked, and a university, where Brandon was. It’s nice that over a decade later, we would be part of starting and running a fund that combines venture with universities. The very first thing we did together, the reason we met, is the thing we do today.

So first, our long shared history has built between us a bedrock of respect, trust, and familiarity that is so uncommon among people of our age. You often see it among the 60- and 70-year-olds in venture, but that’s because they’ve been in business for 40 years. For our generation, you almost never see it.

Second, we’re highly complementary sector-wise. Brandon has made his career out of investing in enterprise software, SaaS, and frontier tech, and I’ve made my career investing in all the things that are nonoverlapping with that: consumer, healthcare, etc. When we started together at Xfund, we felt like we had really good sector coverage. We’re not overlapping or duplicating; we have everything covered.

The thing that was less expected when we started working together on Xfund, but which has become more powerful over time, is that Brandon knows a whole generation of younger venture people and founders, and I know the generation right above them. So we often have really good coverage across a wide variety of years. And we’ve just hired a woman, Jadyn Bryden, who has coverage in the generation below Brandon. This wasn’t obvious to me when we first started working together, but it has become really powerful.

And then, Brandon gets along with everyone. It’s just so nice! Brandon is always interested in whomever he’s talking to. Also, Brandon was a college athlete and is passionate about sports, and I don’t watch sports at all. The people I worked with before were also not big sports fans, and so we’d always look around at each other awkwardly, because the person we were meeting with would want to talk about sports, and we’d just kind of look at them stupidly like, what are you talking about? But Brandon delves right in. So many times, in so many meetings I’ve thought to myself, thank God he’s here, because he’s connecting with them in a way I can’t.